US States Sue SEC Over Alleged Overreach In Crypto Regulation

According to Cointelegraph, a coalition of eighteen U.S. states has initiated legal action against the Securities and Exchange Commission (SEC) and its Chair, Gary Gensler, accusing the agency of "gross government overreach" in its dealings with the cryptocurrency sector. The lawsuit claims that the SEC has overstepped its bounds by attempting to usurp regulatory authority from the states through its enforcement actions against various crypto entities. The states involved in the lawsuit include Kentucky, West Virginia, Iowa, Texas, Mississippi, Ohio, Montana, Nebraska, Tennessee, Wyoming, among others. In another development, the New York State Supreme Court has ruled in favor of Greenidge Generation, allowing the company to continue its Bitcoin mining and power generation operations at its New York facility. This decision also permits Greenidge to reapply for and potentially renew its Clean Air Act Title V Air Permit, which was previously denied by the Department of Environmental Conservation (DEC) in June 2022. While the court upheld the DEC's authority to deny the permit under state climate laws, it criticized the DEC for acting capriciously. However, it noted that Greenidge failed to prove that the DEC engaged in improper policymaking. Meanwhile, Joe Lubin, CEO of Consensys, expressed optimism about the future of crypto regulation under the administration of President-elect Donald Trump. Lubin suggested that the ongoing legal battles between the SEC and crypto companies might diminish, with many cases potentially being dismissed or settled. He emphasized that while not all cases may be resolved, the industry could save significant financial resources as it progresses. Lubin also remarked on the Trump administration's proactive approach, describing Trump as a "pretty good politician" who is adept at capturing and advancing prevailing trends. Additionally, Scott Hartman, a U.S. prosecutor from New York, indicated a potential reduction in the number of crypto-related cases pursued by his office. Speaking at the Practicing Law Institute’s 56th Annual Institute on Securities Regulation event on November 15, Hartman noted that fewer resources are being allocated to crypto cases in the Southern District of New York. He acknowledged the presence of numerous significant fraud cases but highlighted that their regulatory partners are increasingly active in the cryptocurrency space.